It was an upbeat finish for UK stocks today, with financial companies leading the way on the back of strong UK gross domestic product (GDP) growth in the first quarter.

The FTSE 100 closed up 69.75 points at 6,769.91.

Also helping sentiment higher was an easing of the situation in Ukraine, which helped reassure investors that Russia will not cut off its gas supply.

CMC Markets's Jasper Lawler said: "The FTSE 100 made a new seven week high today with the M&A rumour mills still churning as Russian and Ukrainian troops pull back from the east of Ukraine.

"Separatists have gained control of more government buildings in Eastern Ukraine opening the way to further potential reaction from the Ukrainian military, but for now markets have focused elsewhere as both Ukrainian and Russian forces pulled back from the region."

However, reports indicated that officials from NATO had cast doubt on the news of a Russian pull-back from Ukraine's borders, saying they had seen no sign of it.

Meanwhile, at 0.8%, first quarter GDP came in below expectations of a 0.9% quarter-on-quarter rise, but was still well received by the market. Mark Carney, the Bank of England Govenor, said it was evidence that the "recovery is starting to broaden".

However, Capital Economics observed that rise, which it expects to continue, "has come after two or three years of stagnation".

"Indeed, GDP in the first quarter was still below its pre-crisis peak. On the face of it, this suggests that there is more spare capacity in the UK than in the US, where GDP is more than 6% above its 2007 high. Looking ahead, the economic recovery in the UK also faces bigger constraints, including higher debt levels and a bigger fiscal squeeze.

"All of this is reflected in the relative outlook for inflation. We think price rises will slow to around 1% by the end of the year in the UK but rise above 2% in the US in the early part of next year."

In other UK macro news, the economic sentiment index (ESI) rose to 119.5 in April, from a reading of 112.8 the month before, the European Commission said.

The largest gains was seen in the sub-index for the retail trade sector, which jumped from 7.9 to 20.6, perhaps due to impact of the late Easter.

Contraction in Eurozone private sector credit deepens

Money supply in the Eurozone grew at a year-on-year pace of 5.6% during March, down from 6.2% in the previous period, according to data released by the European Central Bank (ECB).

The most widely followed measures of money supply slowed down to an annual rate of growth of 1.1%, after rising by 1.3% in the month before. The consensus estimate had been for a rise of 1.4%.

Elsewhere abroad, US stock markets have opened higher this afternoon on the back of better-than-expected corporate earnings, as investors took a positive stance ahead of a policy meeting at the Federal Reserve.

The Federal Open Market Committee kicks off its two-day policy meeting today and is widely expected to announce that it will continue tapering its asset purchase programme by $10bn each meeting. This will bring the monthly stock of bond buying down from $55bn to $45bn.

Financial stocks lifted by GDP data

Financial stocks were notable risers in today's session, with Legal & General, Hargreaves Lansdown, Standard Life and Standard Chartered all putting in decent gains, boosted in part by UK GDP growth of 0.8%.

Gas giant BG Group clawed back some of yesterday's heavy losses which came after it delivered a double blow to investors, announcing the departure of Chief Executive Chris Finlayson and warned its 2014 production levels would be at the lower end of expectations due to challenges in Egypt.

In the red was Fresnillo, with mining stocks in general trading slightly lower as metals prices weakened. Analysts at HSBC downgraded their ratings for BHP Billiton, Antofagasta and Anglo American to 'neutral' today.

Builders merchant Travis Perkins extended yesterday's losses, while G4S suffered from readacross from Serco, which dragged the second tier lower after issuing a fresh profit warning and indicating it may have to raise capital through a share placing just days before new Chief Executive Rupert Soames takes up his role.

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